Fed Eyes European Banks

Regulators Scrutinize Ability of Institutions' U.S. Units to Fund Themselves

By

David Enrich And

Carrick Mollenkamp

August 18, 2011

Federal and state regulators, signaling their growing worry that Europe's debt crisis could spill into the U.S. banking system, are intensifying their scrutiny of the U.S. arms of Europe's biggest banks, according to people familiar with the matter.

The Federal Reserve Bank of New York, which oversees the U.S. operations of many large European banks, recently has been holding extensive meetings with the lenders to gauge their vulnerability to escalating financial pressures. The Fed is demanding more information from the...